Asia's network carriers are facing major challenges posed by the grim state of the global air cargo industry.
Association of Asia Pacific Airlines director general Andrew Herdman says the cargo market has been stagnant for nearly three years and that a recovery expected last year did not materialise. "2011-12 has been moribund and that has taken everyone by surprise," he says.
The continued weak demand for shipments from Asia to Europe due to the state of the European economy has been the major challenge for carriers in the region, some of which rely upon cargo for up to 40% of their revenues.
There are other capacity challenges because the same carriers add more passenger services to meet the growing demand from the region.
Herdman says that those additional services have had a negative impact on those carriers that also operate dedicated freighters.
"Belly space is absorbing a steadily increasing share of the market and so there is very little demand for additional freighter capacity," says Herdman.
"Belly cargo is generally cashflow positive and profitable, and that softens the blow of operating freighters that are doing so at a loss."
To meet the challenges, Cathay Pacific and Singapore Airlines have responded by reducing services and parking some of their dedicated freighters. SIA announced only recently that it would place a second 747-400F into storage in response to the overcapacity in the market.
Herdman says carriers in the region are still taking delivery of newer freighters as they have lower operating costs than older aircraft such as converted Boeing 747-400s.
Qantas also announced earlier this year that it plans to lease and operate a 747-400ERF that will replace a 747-400F operated for it by Atlas Air on services between Australia, China and the USA.
Herdman says the rare bright lights have come from stronger retail demand in recent years, linked to big product launches from the likes of Apple and Samsung, as well as the running-down of inventories in 2010.
"Air cargo does well when retail demand is surprising," says Herdman.
However, in the longer term, Herdman says that "it is going to need some pick-up in the worldwide economy" before the industry can stabilise and start to grow again.
Source: Flight Daily News
